General Motors Co. GM +8.15% agreed to help Nikola Corp. NKLA +38.55% engineer and build its electric pickup truck in exchange for an 11% stake, the latest tie-up between a traditional automaker and an electric-vehicle upstart.
Shares of both stocks surged on the news in morning trading. Nikola jumped 27%, while GM added 5.4%.
Under the deal, General Motors will engineer, validate and manufacture the electric battery and fuel cells for Nikola’s Badger passenger truck. In exchange for the services, Nikola will give GM $2 billion in new stock and the right to nominate one director.
Nikola had said it planned to partner with an established auto maker to build the Badger, which will be powered by both an electric battery and hydrogen fuel-cell technology. As part of the deal, the electric-truck startup will use GM’s Ultium battery system and Hydrotec fuel-cell technology.
Founded in 2014, Nikola went public in June via a reverse merger. Investors quickly drove up its value amid broader enthusiasm about electric vehicles, helped by Tesla Inc.’s recent string of profits and success expanding production. Nikola even briefly passed Ford Motor Co. in market value.
More recently, Nikola’s share price has retreated, losing more than half its value over the past three months. Before Tuesday, the company’s market value was $13.5 billion. In comparison, GM was at $42.9 billion, Ford at $27 billion and Tesla at $390 billion.
Nikola will be responsible for the sales and marketing for the Badger and will retain the Nikola Badger brand. The Badger will be unveiled in December, and production is expected to start in late 2022.
Last month, Nikola said it secured an order for 2,500 electric garbage trucks from refuse giant Republic Services Inc.
Last year, Ford Motor Co. took a $500 million stake in electric-truck startup Rivian Automotive.